Friday, December 14, 2007

More Knob

My post Tuesday attracted some attention at Beam Global. They wanted me, and you, to know that, "Knob Creek is a product of such quality and aged a full 9 years that demand has exceeded any imaginable supply forecast. We are now managing allocations very closely as we are product constrained and will certainly not be lowering price. We are doing everything possible not to gouge our loyal consumers, but in some key markets we have raised price and will continue to do so to control overall demand."

I specifically mentioned Knob Creek in Tuesday's post because sightings of higher prices on Knob were reported to me by several consumers in different markets around the country. My point then was that, historically, Beam has been one of the more aggressive companies at using short term promotional deals to gain floor stackings and drive volume. A few years ago, a brand like Knob didn’t have enough volume to make that worthwhile. Now it does.

Most companies will run promotional deals just after a price increase to take some of the sting out for regular customers. In saying that, I didn't intend a knock on Beam or Knob Creek. That's just good business, especially for building volume. Beam does that as well as any and better than most.

When the tight supply situation for well-aged bourbon was first developing, about two years ago, some industry leaders expressed concern to me that using price to control demand might be counter-productive, as it risked stifling the current boom. They suggested that allocation was a better solution. In fact, we're seeing a combination of allocation and price increases.

An argument can be made that American straight whiskey has long been underpriced. It certainly remains, at least for consumers within the USA, the best value in fine aged spirits.